Why to Avoid Discounting and Competing on Price?

Business owners - what’s your marketing philosophy toward discounting prices vs. adding items of high perceived value?  
YouTube Video link...

Let’s assume we are not under duress, clearing inventory or other mitigating circumstances and seek what’s in the best interest for both the customer and company long term.  

If you choose discounting what are the implications?  

1. You admit you’re competing primarily on price and you’re looking for a transaction vs a successful and fulfilling relationship with the customer.  You educated the customer that your new base price is now your discounted price.
2. If your discount was significant to attract customers you probably discounted your profit margin away and are in first place to a race to the bottom
3. And even it you still have a positive margin you have to make a lot more sales to make the same profit as you would with a higher price. For example, if you have a 35% margin, and you are considering a 10% price decrease, you must have a whopping 40% increase in unit sales to end up with the same total gross profit dollars.

If you choose adding items of high perceived value, then

1. You’re enhancing the offer with other products and services that enrich the transaction and make the customer feel more fulfilled and successful and it didn’t cost you a lot to include
2. You are preserving your margins
3. And you had to make fewer sales to achieve the same profit amount

ActionITEM Tip:  To avoid having to discount prices, come up with a product and service list everything your customer values, calculate your margins per product and service and determine where you can add these to your marketing offers.  For the best answers of what has high perceived value, ask your customers.  Finally, measure and test your offers so you know what’s working and how to improve.

If you’re at a loss as to whether to discount or what you can offer that has high perceived value, then let’s talk.  I’ll offer a complimentary marketing assessment guaranteed to leave you with at least a half dozen ideas to avoid competing on price.  

Ph:  972 709 6776   Em:  StephenMarino@ActionCOACH.com